Shanghai Citizens Dump US Dollars
Because individual forex account holders flock to dumping the greenback, banks have experienced the ever more serious issue of losing their foreign currency deposits. The Shanghai branch of the People's Bank of China reveals in its latest currency lending statistics that at the end of April, the entire city's Chinese financial institutions have lost a total of US million in their various types of foreign currency balances, with savings deposit accounts losing US million.
Many of Shanghai's banks active in forex businesses reflected that based on considerations of forex risks, long-term forward currency transactions have been very active, with volume rising by the month. In particular, forward transactions longer than 3 months have been increasing their proportion of total forward deals.
Financial experts point out that concentrated and larger-scale forex transactions enable total forex volume to grow rapidly and if the Yuan were to be re-valued, banks would face the risks of losing money.
http://www.chinanews.cn/news/2004/2005-05-26/4956.shtml
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